The case for an on-contract T-Mobile Nexus 4

The Nexus 4 was announced to much fanfare last week, especially when the prices hit. $299 for 8GB? That’s less than half what a high end smartphone will cost you off contract nowadays. Buying from the Play Store at these prices is a no-brainer for many of us.

After the dust settled, we started to get more information about the pricing and availability of the Nexus 4 outside of the Play Store. Here in the states, your only option to pick up the device with a carrier attachment is on T-Mobile. As we’ve learned since the announcement, T-Mobile will be charging $199 (after $50 mail-in rebate) on a Classic Plan with a 2-year commitment for the 16GB Nexus 4.

Now some quick math will make you realize that this may not be the best deal in the world. At $199, you’re signing a 2-year contract to save $150 off of what Google is charging directly. As we’ve highlighted several times before on the site, there are a multitude of reasons to consider buying a device full price and choosing a cheaper plan without a subsidy. T-Mobile itself even offers Value Plans, which are in every way identical to Classic Plans but are cheaper every month because they offer no device subsidy -- not to mention the multitude of Prepaid options it offers.

So why do I think it’s a good idea that T-Mobile is offering the Nexus 4 on contract for an inflated price? There are actually a few good reasons.

First, it’s important for Google to have some kind of retail presence in the U.S. market. Outside of Best Buy selling the unlocked Nexus S, Google hasn’t had a great track record of offering Nexus devices in stores. The Verizon Galaxy Nexus was another try, and we all saw how that worked out. At this point in time, T-Mobile is likely the only carrier that Google can convince to sell the Nexus 4 exactly as-is, with no extra bloatware or carrier restrictions. All indications at this point are that T-Mobile's Nexus 4 will be indistinguishable in hardware and software from Google's. It probably doesn't expect to sell many of these, but having presence in carrier stores across the country will increase awareness of the Nexus brand name.

Not only is it important to have physical store presence for brand awareness reasons, but also because customers today like to physically touch devices before they purchase them. Sure consumers purchase things online, but they still shop in physical stores to see the items first. From an educated consumer standpoint, being able to play with a device in store is important to build confidence in the device. Google's pricing structure is good great, but it might not be good enough to get people to buy a device sight-unseen.

Lastly, $199 on-contract may actually be a good deal for some users in specific cases. Many people out there are part of a family plan. And while it may be a great idea to move to a Value Plan or Prepaid option for many individuals out there, it’s not so easy to move a whole family all at once. For the Android (and Nexus) enthusiast out there tied into a Family Plan, having that $199 option available is a great way to save $150 that they shouldn’t have to spend. The upgrade is there, might as well use it.

Don’t get me wrong, nearly everyone that is considering the Nexus 4 should be buying it from the Google Play Store. But not everyone -- nearly everyone. For those few people that it makes sense to buy the phone on contract, they deserve to get the same great Nexus experience that the Play Store purchasers get. Everyone else buying from the Play Store now has a physical storefront to try the device before they buy as well. The general consumer who has never heard of a Nexus before now has a way to discover it.

Google has an opportunity by partnering with T-Mobile to expose the Nexus line to the general public and offer a compelling on-contract option to specific customers, all while keeping alive its vision of what a Nexus should be.

Reader comments

The case for an on-contract T-Mobile Nexus 4

Youve made the case for Google to sell them in Tmobile stores, but not actually the case that people should actually buy them...

There a bad deal at the minute, i would expected Tmobile to follow the European market on this and offer it for Free on a 2 year contract, since this phone is about $300 cheaper than normal flasgship phones.

Since this is what carphonewarehouse is doing in the UK. My mate for example is due an upgrade and is getting the Nexus4 from CPW on a 2 yr contract, since the phone is free on a 2 yr £36 a month contract, this is no different than any other phone.

I will be buying it out right and selling my GS3 for £250 so its like a straight swap, a 6month old phone for a better speced (dont use a Micro Sd slot 16gb is fine by me) for a brand new phone

Only the last point makes a case why people would ever want to get it in contract, the rest are more concerned with why it's a good idea for them to be in a store, but you still wouldn't buy it from there!

T-Mobile subsidizes the prices on their plans in order to help customers bring down the price after 20 months of being on contract. I love T-Mo for doing something different that the carriers don't offer. I've been paying 235 on sprint for two years where on T-Mo I'd be paying 205 and after my 20 months I'd go down to 165. That's cool in my opinion.

The US market is not made like that. To offer a smartphone for free with 2 year contract would be unheard of in the US. Some people would most likly think it's a cheap phone (normally free on contract is a just a phone) While the UK and Europe have no qualms about your suggestion. Most uneducated people in the US would be looking for the "catch" or waiting for the other show to drop.

Bottom line here their will be plenty of people that will walk into a Tmobile store and purchase this device. Some people feel the need to look and touch before buying Google has intrusted Tmobile something that won't exist on any other carrier. Business relationships are important and Google didn't forget who it was that launched android when nobody else had the balls to take a chance on a unknown platform. Let's remember WHY we are at this point today where Google gave the biggest carrier in the US the high hard one due to poor updates and the need for tampering with the intended software of the device. That won't happen with Tmobile because they don't act like they are above android. And they don't act bigger than their britches like Verizon. Plenty of current value plan customers will jump on this Nexus 4 Tmobile takes care of it's customers with deals on upgrades even if your not entitled to one they still find a deal for you. Plus adding lines of services garners you even better deals on all their devices. All that really matters to pure Nexus buyers is getting the timely updates from Google. Must people won't care where or how much the price is if they really want the device. After owning the worst Galaxy Nexus ever on Verizon from December 15th 2011 to June 28th 2012 when I DUMPED VERIZON FOR TMOBILE I would get this device but been their done that. I feel Nexus devices are boring and offers no true features that truly the essential hallmark of android. So I will be purchasing the Samsung Galaxy Note 2 on Tmobile November 15th plus with all the discount pricing going on at Tmobile on every current handset starting Friday November 9th I just waited for the best deal ever on the Galaxy Note 2... http://briefmobile.com/note-ii-galaxy-s-iii-to-see-major-price-changes-o...

I think the pricing decision was made to present the N4 as a flagship phone,something t-mobile US, aside from the GS3, lacks. Verizon has the iPhone, GS3, and Droid line,Sprint has the iPhone, GS3, Evo 4g lte, and Optimus G, and AT&T has the iPhone, GS3, Optimus G, Lumia series, and One X. All these phones were priced at $199 when they launched and the N4 needs to be seen as t-mobiles response by the general public.

I am not a pro like a lot of you, mintvilla, so if you could explain...or rather me tell you what I am thinking then you clarify

While the above article looked good, I was going all over the place...on contract, off contract. I think he was trying to make a point for going on contract. But then he threw me off by saying "inflated price" or something like that. where in fact, it is cheaper to get on tmobile on contract, save for the fact that you would sign a new contract.

can you explain. Not sure how the notifications work in the forum, but if you could email me great. 4 + 2 = 6 (spam) my email is e h o o k 68 at y a h oo dot com

I totally agree with the Family Plan part. Most times, having a smartphone one a family plan is either cheaper, or the same price as a prepaid plan (I still pay $40 on Verizon, $30 for data+$10 for the line). Plus, you'll likely get the updates just as quickly.

I'm not so sure I can. I had a family plan, and the quick math told me it was cheaper to BUY out the remaining lines (aka pay a conversion fee) to convert from a Classic Plan to a Value Plan. Within 2 months, I had already made up the difference.

One argument FOR buying a subsidized phone is for those who are expensing their entire bill for their jib, but the company won't directly pay for your phone. You pay a reduced cost up front and expense the rest over the life of the contract.

Comparing the classic to the value, the value will be much cheaper. You pay an extra $300 over he long term for the value phone but the data plan cost $10. On the classic the same plan cost $30. So for two years you'll pay $480 more than the value plan. And that means you paid $180 more for the phone on a classic plan.

How come no one talks about T Mobiles new business structure. They don't subsidize the phones anymore. They sell you the phone for full price and "subsidize the plan". The $200 is the down payment and you send the rest of your 2 year contract paying off the phone about $10 at a time every month. This is a bad valve when you compare what Verizon or ATT does for customers that sign new contracts which is around $450 off of a new phone. I think it is a complete rip off to buy this phone on contract.

Having a store also helps with customer service. Most people charge their phones twice daily. So what happens when the Nexus 4 battery dies after a year of abuse? The thing isn't replaceable by the user. So I like the idea of taking my phone to a store for a qualified technician to do it for me.

Don't think most people charge phones twice daily. That's certainly more of a power user's dilemma.

That being said, even charging twice daily, assuming a FULL 0-percent to 100-percent charge each time (no one does this), the Nexus 4's battery is rated at 800 full charge cycles. So even if you charged it completely twice a day, it'd take 1 year and 2 months for the battery to "die".

Sorta, well sheez. I think after the grand slam Google just had with their 7" tablet'the people who'll buy this phone will be the ones who Google is targeting. I think the savvy buyer will understand what Google doing,wresting a little power from the carrier. Someone needs to, there has to be less carrier restriction and more input from developers. Carriers are way too protective of property they don't own.

I award you 1 Internets for this. Hands down, the best thing Google can do for their customers right now is to undermine the Carriers' business model. They have far too much power and that won't change unless a group like Google is willing to challenge the system. The Nexus 4 allows us to say to people "there's no way that phone's worth $600. I paid half that for mine off-contract and it has equal/better componennts across the board. You're being played." The US needs the Nexus line right now.

I totally buy into the retail presence argument. There are probably still a lot of people that won't buy without checking it out in-person first. Google can post all the 3-D, 360 degree views they want - but holding the physical object in your hand can make or break the sale.

The underlying issue is that Google does not yet have the muscle to dictate terms to carriers like apple does. This is not an apple fanboy statement; if demand was not so high for the iPhone, the carriers would force restrictions on apple as well, up to and including not carrying the phone at all. Hopefully one day Google will have this power.

Fanboy(ism) aside, I like that Apple completely controls the relationship with the carriers. Conversations between apple and the carriers go like this:

I have to agree with your points in this article, I've been in the situation where the phone plan I'm on does not save me money if I buy the phone outright in fact it would be more expensive.
There are usually family plans that have several phones locked in to a payment plan. For instance buying this phone outright om the classic plan does not save you any money because the data rate is the same. I its cheaper to get into a two year contract

This year I finally switched to tmobiles value plan where it does make sense to buy the phone outright and save on the data plan.

That'll be great for...someone but as a current owner of a VZW Galaxy Nexus, I can tell you I'll never buy a phone on contract with any carrier again. I don't like having to jump through hoops to have access to Google's apps (you know I'm talking about Wallet.)

I'm surprised I've never seen the comparison before but the whole situation reminds me of a trailer park. You can buy a trailer or you can rent one but either way, the trailer park gets a say in what you do. The only difference is the amount of say they have and your own ability to take your trailer to another park.

Why would you resign a contract for such a small subsidy though? You would be much better served signing for a more expensive phone and selling it for $200+ more than you paid (which would be very easy with a brand new in the box android phone). Then go buy the nexus from play store. Get a $200 dollar SIII, hock it for $400 easily, buy nexus for 350... now you're $50 richer (or more depending on what you can sell your SIII for, going to $550 online so 400 is a steal). But that's just my cheap ass, some people wouldn't want to put in the leg work.

I think having a place to allow customers to see and try the device is great, but even when comparing t-mobile's classic and value plans. The cost difference is about $60 a month, and I don't see a case where even on a family plan the subsidy would be worth the additional cost.

am i missing anything? $59.99/month for Unlimited Everything plus 2GB of 4G HSPA and then throttled thereafter? any catches with this plan? i'm with Sprint now for Unlimited Everything at $74/month after all taxes/fees/discounts but i never go over 2GB data. i like the freedom of no contract and GSM SIM card flexibility. i'm afraid of T-Mobile coverage though.

You've got it, all except one thing. T-Mobile's Value Plans are 2-year contracts. You don't get a device subsidy, but you still sign a 2-year in order to get that reduced rate. It's worth it if you plan on sticking with T-Mobile, but I'd understand if you didn't want to sign one and would prefer month to month. For that, you'll have to stick to T-Mobile's Prepaid options.

If you're going to stay under 2GB data, I recommend T-Mobile's Prepaid Monthly 4G plan, which is $60 a month, with unlimited talk/text and 2GB of data (throttled thereafter).

The only reason to consider the Value Plan is because it offers completely unlimited data if you want it, and it also has family plan options. There are also options with fewer minutes (500) but still unlimited data, which is also good.

i read that the Nexus 4 is the same exact phone whether you buy it from Google Play or from T-Mobile. hence - yes - you will get the OTA update at the same time on either. T-Mobile is simply a retail channel.

Yep I have it and it's that good. My company gets a discount on tmobile and even at the price the discount applied.
Tmobile has the best customer service but the signal coverage is not the best in rural America. In CA you can try the service out for a month or you can buy a prepaid service lie smarttalk and use the tmobile sim. To try out their network. I live in North city and tmobile for me is better than Verizon and art, but when I travel those other two seem more reliable.

I'm going to get it through Tmobile only because my mom upgraded us a year ago, and I never used the handset upgrade, so it is just waiting for me there. Sooooo, my patience paid off. I get to save 150 and don't have to renew my contract.

I would get it on contract. I would because I could get the equipment protection plan on it. I hear that google has bad customer service with their own physical products. I know Chris from the Verge had that fiasco with his Nexus 7 when it came out. Also I know with the protection plan if something happens I would get a phone that was similar to it.

eh~ i would still get it from google playstore b/c i already renewed my contract and used the upgrade so that means i would have to pay $600 retail price if i want to purchase a Nexus 4 from T-Mobile vs $350 straight from google play store... i still think it's too expensive to pay $200 (of course after MIR) for a $350 retail priced phone, if it was Free or somewhere close to $50~$100 maybe i'll get it from T-Mobile but $200 is still too darn high for me but i get the point what google & T-Mobile is trying to do though keep up the good work!

Isn't one of the advantages of the classic & value plans over the Monthly 4G that they include data roaming? My understanding is that there is no data roaming on the Monthly 4G. For some people that could be very important.

I hate mail in rebates!! I'm wondering if the Nexus 4 will be sold at third party retailers in the U.S. Amazon, Lets Talk, Wirefly and others usually spare customers the rebate crap and routinely beat T-Mo's upgrade prices. Most also sold the Galaxy Nexus. In fact, the VZW GNex can be had for a penny with a new contract right now at Amazon! I've got three lines on my classic family plan and one line is due for an upgrade now. I'll be buying this phone, and extending my contract, but if I can avoid the T-mo store and the mail in rebate hassle, I'd love to buy it elswhere.

Then you should probably buy it from the Play Store. There's no indication at this time that other retailers will be carrying it, and if they do they'll have the same poor pricing as other retailers around the world. They're buying the phones from LG and the prices are much higher than the ones Google will sell directly.

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